Gensol Engineering On Debt-Reduction Drive To Address Rating Downgrades
The solar design and engineering company asserts that liquidity is improving by way of customer payments.
Gensol Engineering Ltd. said on Wednesday that it would use proceeds from the asset divestments to reduce debt to address concerns pointed out in recent credit rating downgrades.
The steps taken by Gensol to reduce debt include initiating sale of 2,997 electric vehicles as well as sale of a wholly owned subsidiary. "As a result of these two divestments, our debt will significantly reduce by Rs 665 crore, resulting in a debt-equity ratio of 0.8," it said in its investors’ presentation.
The total current debt stands at Rs 1,146 crore against the reserves of Rs 589 crore, making it a debt-equity ratio of 1.95, the investors' release said.
Even as it acknowledged the downgrades by credit rating agencies Care and ICRA, the firm blamed short-term liquidity mismatch for the situation.
However, the solar design and engineering company asserted that liquidity is improving by way of customer payments. "That said, we understand the concerns these downgrades have raised and are committed to addressing them responsibly to all our stakeholders," it said in the statement.
Additionally, denying any involvement in "falsification claims", the company said that it will be setting up a committee to comprehensively review the matter. "This underscores the company's commitment to accountability, transparency and sustainable business practices," it stated.
The company went on to point to its order book of more than Rs 7,000 crore, 42% growth in revenue to Rs 1,056 crore in the first nine months of the current fiscal, 89% growth in earnings before interest, taxes, depreciation and amortisation to Rs 246 crore and 34% rise in profit to Rs 67 crore to reinforce its commitment.
It also added, "These are challenging times, and we are taking decisive steps toward strengthening our financial position and ensuring long-term financial stability."
"In the current financial year, we have reduced our debt obligation by Rs 230 crore," the company said, adding that it has initiated a series of asset divestments to significantly reduce debt.
"While the company continues to pay its debt obligations, all proceeds from the above initiatives will be directly utilised toward repaying our existing debt and working capital obligations."
Through these periodic interventions and upcoming planned initiatives, the firm said it is resolute in its goal of achieving a zero net debt status.
"We are confident in our ability to navigate this period and emerge stronger. We value the trust of our stakeholders and will provide regular updates as we progress towards our financial goals," the statement added.
Shares of Gensol Engineering closed 9.99% lower at Rs 372.60 apiece on the BSE, compared to a 1.01% advance in the benchmark Sensex.
(With PTI inputs)
